This paper experimentally investigates how people’s confidence about economic and financial performance are shaped by the environment in which a group of people interact, and the existence of groupthink in the formation of people’s belief and their investment decision. By recruiting 1385 subjects on WeChat, one of the largest social media, we conduct an online experiment of an artificial investment game. Our treatments manipulate whether subjects can observe others’ reported beliefs about the performance of the financial market, whether subjects engage in public or private investment decisions, as well as how the return of the subjects’ investment projects is related to the performance of the financial market. The findings suggest that subjects’ beliefs significantly converge wh...[ Read more ]

This paper experimentally investigates how people’s confidence about economic and financial performance are shaped by the environment in which a group of people interact, and the existence of groupthink in the formation of people’s belief and their investment decision. By recruiting 1385 subjects on WeChat, one of the largest social media, we conduct an online experiment of an artificial investment game. Our treatments manipulate whether subjects can observe others’ reported beliefs about the performance of the financial market, whether subjects engage in public or private investment decisions, as well as how the return of the subjects’ investment projects is related to the performance of the financial market. The findings suggest that subjects’ beliefs significantly converge when beliefs are shared, though in different directions across groups.

Keywords: Groupthink, investment, online experiment